During the mortgage process, several disclosure documents are provided to help you understand the terms of the loan, your rights, and the costs involved. These disclosures are required by law and are designed to promote transparency and protect you as a borrower. Here’s a breakdown of the key disclosures you'll receive:
1. Loan Estimate (LE)
When: Within 3 business days of submitting a loan application.
Purpose: Provides a summary of the loan terms, estimated interest rate, monthly payment, closing costs, and other fees.
Key sections:
Loan terms (rate, type, prepayment penalty, balloon payment)
Projected payments (principal, interest, taxes, insurance)
Costs at closing (origination charges, services you can/cannot shop for)
Why it matters: Lets you compare offers from multiple lenders.
2. Closing Disclosure (CD)
When: At least 3 business days before closing.
Purpose: Provides final details of the mortgage loan, including actual costs.
Key sections:
Final loan terms (rate, payments, closing costs)
Cash to close (how much you need to bring to closing)
A detailed breakdown of costs and payments over time
Why it matters: Helps you confirm everything is accurate before you close.
3. Mortgage Servicing Disclosure Statement
When: Within 3 business days of application.
Purpose: Explains whether your loan might be sold or transferred to another company for servicing.
Why it matters: Tells you who will manage your payments and account.
4. Affiliated Business Arrangement (AfBA) Disclosure
When: At the time of referral to an affiliated business (e.g., title company).
Purpose: Discloses any relationships between the lender and other service providers and explains you’re not required to use them.
Why it matters: Ensures you know if there’s a potential conflict of interest.
5. Home Loan Toolkit (for purchase loans)
When: Within 3 business days of application.
Purpose: A consumer-friendly booklet from the CFPB that explains the mortgage process, costs, and how to shop for a loan.
Why it matters: Helps first-time buyers understand the steps and choices.
6. Right to Receive a Copy of Appraisal
When: Within 3 business days of application.
Purpose: Notifies you that you can get a copy of the appraisal at no additional cost.
Why it matters: Gives you insight into the value of the home you’re buying or refinancing.
7. Initial Escrow Disclosure
When: At or within 45 days of closing.
Purpose: Details amounts to be collected in escrow for taxes and insurance.
Why it matters: Shows how your monthly mortgage payment is allocated.
8. Notice of Right to Rescind (for refinances only)
When: At closing (for primary residence refinances).
Purpose: Gives you 3 business days to cancel the refinance loan.
Why it matters: Protects you from making a rushed decision.
tune in and learn at https://www.ddamortgage.com/blog
Didier Malagies nmls#212566
dda mortgage nmls#324329
